Revisiting HillaryCare: What It Proposed and Why It Failed

As President Obama struggles to overhaul the health care system, an NPR poll finds that current public opinion on reform matches that of the Clinton era—people are dissatisfied with the system, but happy with their own insurance. They want change, but are leery of change for the worse. With the failure of a Democratic president’s reform attempts in the early 1990s looming as an ominous counterpoint, what can the Obama administration learn from the mistakes of HillaryCare?

Its architects, Hillary Clinton and presidential aide Ira Magaziner, based the plan on the concept of “managed competition,” described by The New York Times as the combination of “market forces with Government regulation in the hope that doctors and hospitals will compete for business on the basis of price and quality.”

Organized around regional “health-purchasing alliances,” the bill bundled different groups and employers together in their search for the best insurance, which would be chosen by an alliance board from a selection of a few large companies. The administration also emphasized managed care, including limits on premiums and incentives for cheap alternatives like generic drugs, in order to lower costs.

Although the doomed bill abandoned any attempt at a Canadian-style single-payer system, in which the government alone pays health care providers, critics still labeled the regulation-heavy bill as socialist legislation.

Like Obama’s efforts, the Clinton bill faced the challenge of an economic recession—an obstacle to any major spending plans—and the well-financed opposition of the insurance and pharmaceutical industries, who perceived reform as a threat. By 1994, Republicans had not only defeated the administration’s ambitious plan, but had taken control of Congress.

As Amy Waldman writes in a 1996 Washington Monthly review of reform eulogies, the administration’s failure to explain its policies invited the bill’s opponents to define the reform effort in their own terms. The insurance industry sponsored “Harry and Louise,” an anti-reform ad that devastatingly characterized the Clinton plan as an attack on individual choice.

Accuracy rapidly became almost irrelevant to the reform debate. Urged on by leaders like Bill Kristol, who “instructed the GOP to oppose any reform proposal sight unseen,” many conservatives would not engage with reformers’ claims, while the Clintons argued their case based on the marketing advice of political consultants, rather than strict adherence to truth.

Misinformation had a devastating effect on public opinion. In March 1994, The Wall Street Journal found that when asked about the Clinton plan, focus group and poll respondents did not support and could not explain it, but when presented with an unidentified description of it, expressed approval.

President Obama may be known for his cool demeanor, confidence and tight management, but one of the primary lessons of HillaryCare is the importance of humility and outreach.

Reflecting on the debacle in 1996, the Washington Monthly wrote that the “Clintons chose a reform path privately and shaped it privately,” even shielding the names of aides who contributed to Hillary’s closed-door task force. Hillary’s commission called in various interests, but, according to moderate Republican Rep. Fred Grandy, “while they had no problem collecting our input, they never intended to use it.”

More recent retrospectives focus on this imperial attitude and resulting Congressional estrangement as the key to HillaryCare’s collapse. According to an earlier New York Times article, Ira Magaziner, Hillary Clinton’s co-coordinator, alienated members of Congress because he struck them as “remote and too sure of himself.” The bill’s length and complexity, along with the administration’s secrecy and Magaziner’s aloofness, implied that the Clintons considered the bill a final product, not open to debate or compromise.

After health care reform failed, Hillary Clinton claimed that the original draft had only been a starting point, but accounts agree that the administration compromised too little, too late. This inflexibility cost them momentum, the sympathy of moderates, and the unified support of their base.

Hillary Clinton became the face of health care reform, traveling the country as its spokesperson and leading the battle in Washington, D.C. She cast herself not as a participant in the legislative process, but as a crusader against a nefarious insurance industry. As the Washington Monthly concluded, “universal coverage was portrayed as the right thing to do, but never as the smart thing to do.”

This approach transformed the debate from one of policy to one of character. Hillary Clinton undiplomatically ignored the concerns of the insurance and drug companies, whose cooperation she needed to pass the legislation, and instead denounced them as villains. Character attacks, in the place of policy rebuttals, intensified fear that the bill was bad for business and the economy.

In turn, reform opponents demonized Hillary Clinton. After defeat, many administration supporters continued to insist that the corruption and power of the insurance industry alone blocked reform. Opponents highlighted the Whitewater scandal and accusations about Clinton’s investment bet against health care stocks to undermine her credibility, which had become irrevocably linked to the reform effort. These distractions overtook the reform debate, crippling its momentum.

With the discussion thus polarized and argued in terms of morals instead of merits, the side with the better marketing campaign won.